Borr Drilling: Demand for jack-up rigs growing
The market for modern jack-up rigs has reached 90 percent utilisation – for the first time in the cycle – and the demand for jack-up rigs is growing, offshore drilling company Borr Drilling has said.
Borr said there is visible demand for more than 50 jack-ups in the next 12 months, most of which is coming from the Middle East (19) rigs, Mexico (12), South-east Asia (9), West Africa (8), India (3), with the remaining coming from the rest of the world.
According to Borr, there are now only 14 warm stacked units left in the market – the rigs which can go on a contract relatively quickly – five of which are owned by Borr.
Borr currently has 19 contracted rigs – with another 12 to find contracts for. Of the dozen, five are available, while seven have yet to be delivered.
Borr Drilling Chairman of the Board Paal Kibsgaard, said: “The jack-up market tightened further in the third quarter, with strong tendering activity, improving day-rates and a strengthening market outlook for 2020. We continued to execute well throughout our rig operations, as well as on our rig activation programme.
“Over the past two years, we have brought 16 rigs into operation, with an additional three rigs presently committed to commence work.
“With a further 12 modern rigs left to be contracted, of which seven are still to be delivered, we are in a strong market position, both in terms of capacity and the age profile of our fleet.”
Since the previous quarterly results released in August 2019, Borr has been awarded contracts, LoAs (Letters of Authorisation), and extensions for six rigs with a combined revenue backlog of approximately US$169 million. Total additional backlog added year to date of approximately US$465 million.
For the third quarter of 2019, Borr reported operating revenues of US$102.7 million, net loss of US$79.2 million and Adjusted EBITDA of US$13.8 million for the third quarter of 2019.
Technical utilisation for the operating rigs was 99.1% in the third quarter and 99.0% for the first nine months of 2019. Looking ahead, Borr said it expected a strong increase in EBITDA in 2020.
“Based on the current day-rates of around US$100k/day, and operating expenses of around US$50k/day, we aim to generate around US$500 million per year in gross cashflow before interest when all of our rigs are employed.
“This clearly shows the cashflow potential for Borr in the coming years, which the company is fully focused on realising,” Mr Kibsgaard said.
Source: Offshore Energy Today